2. The costs of appeal shall be borne by the Plaintiff.

A. On December 30, 1997, the Plaintiff deposited KRW 40 billion in a specified money trust to the Insurance Bank. On the same day, the Plaintiff purchased KRW 40 billion in subordinated bonds issued by Samsung Securities Co., Ltd. (the subordinated bonds of this case, hereinafter referred to as “instant subordinated bonds”) with an earning rate of KRW 17.26%, which is a related party. The broker of Samsung Securities purchased KRW 50 billion in commercial papers issued by Samsung General Chemical Co., Ltd and KRW 50 billion in commercial papers of the same company on February 13, 1998 and KRW 50 billion in commercial papers of the same company on February 13, 1998 (hereinafter referred to as “Tsung General Chemical Co., Ltd.”) at a discount of KRW 13.42% in each of the issued bills at a discount of KRW 10 billion, which is a related party to Samsung Securities Co. 30, 197.

B. The Defendant: (a) determined that the above purchase constitutes an unfair act between specially related persons under the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998); (b) determined that the purchase fund constitutes an amount of provisional payment paid without connection with the business; and (c) imposed an amount of KRW 6,085,887,941 on the above provisional payment as the business year 1998; and (d) imposed an amount of KRW 861,871,673 as the interest paid in the business year 197 and KRW 8,186,684,691 as the interest paid in the business year 1998 as the total of KRW 7,186,684,69,346 as the income paid in the business year 199; and (d) imposed an amount of KRW 365,689,490 as the corporate tax in May 15, 2001 as the corporate tax year 1998.

【No Evidence-based dispute, No. 1 to 12, and No. 2-1 to 11

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Exclusion of interest paid from deductible expenses

(A) The business affairs of the company include all matters related to corporate activities, such as business activities, investment activities, and financial activities, which are conducted by the company. The purchase of subordinated bonds or bills by the plaintiff is intended to carry on the "other financial business" as stipulated in the articles of incorporation and corporate register of the company, and constitutes normal financial and investment activities to assist the company in carrying out its business activities effectively, and thus, it is related to the business affairs, and therefore does not constitute provisional payment in excess of the interest paid under Article 18-3 (1) 3 of the former Corporate Tax

(B) The legal nature of a contract for issuance and underwriting of bonds under the Commercial Act is a sale and purchase, so the purchase of subordinated bonds of this case is not a simple loan, but a sale and purchase of securities constitutes a provisional payment under Article 18-3 (1) 3 of the former Corporate Tax Act.

(2) As to the denial of wrongful calculation

(A) Article 46 (2) 7 of the former Enforcement Decree of the Corporate Tax Act provides for the time when money and other assets are loaned or provided to specially related persons without compensation or at a low interest rate due to the type of denial of wrongful calculation. However, it is not an unfair act since the Plaintiff purchased subordinated bonds and corporate bills at a low interest rate that is deemed to have neglected economic rationality, and thus, it is not an unfair act. Moreover, whether it constitutes a lower interest rate or rate under the above Enforcement Decree should be determined on the basis of the reasonable monthly interest rate.

(B) The proviso of Article 47(2) of the former Enforcement Decree of the Corporate Tax Act (amended by Act No. 47(2) provides for a loan to a related party (limited to a corporation or an individual operating a business) and an agreement is made to receive interest at the overdraft interest rate by setting a redemption period, the overdraft interest rate shall be deemed as the loan interest rate. The loan or provision of funds at least the overdraft interest rate shall also be included in this case. Since the Plaintiff purchased a purchase agreement at a rate higher than 12% (the 2nd bill of the overdraft interest rate at the time of purchase of subordinated bonds or corporate bills of this case) which is the overdraft interest rate at a rate higher than the overdraft interest rate at the time of purchase of subordinated bonds or corporate bills of this case, the disposition

(C) In calculating the recognized interest, the Defendant calculated the recognized interest rate in the business year 1998 on the ground that the interest rate on the current account of the current account interest rate or the ex post facto change in the interest rate on the subordinated bonds and commercial papers of this case purchased at the discount rate before January 1, 1998, even though the recognized interest rate was not included in the calculation of the income in the business year 1997, and included it in the calculation of the income in the calculation of the recognized interest rate, is against Article 47(1) of the Enforcement Decree of the Corporate Tax Act.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The Plaintiff is a corporation that, as a general trading company established on January 1, 1952, engaged in business activities as its main business, the commercial sector, the distribution sector, the construction sector, and the clothing business sector. At the time of December 30, 1997, there was approximately KRW 2.4,33.1 billion for short-term loans with the maturity of less than one year, but the short-term loans with the maturity of less than one year exceeded KRW 2.4,3.1 billion. The debt ratio in 1997 was 620.49%, which was more than the average industry ratio of 524.69%, more than the average industry ratio of 100%. Accordingly, it was difficult for the Plaintiff to secure liquidity in preparation for early recovery of financial institutions. Meanwhile, since the government requested the IMF relief financing on November 21, 1997, the entire state was faced with the financial crisis.

(2) In general, subordinated bonds have a higher rate of return compared to general bonds due to their characteristics such as redemption of subordinated bonds, deferment of redemption of principal, non-guaranteed bonds, termless redemption, and prohibition of offset. 17.26% of the return rate of subordinated bonds of this case, despite the Plaintiff’s determination, is lower than the return rate of general company bonds on the date of issuance of the bonds (28-33%) and the final return rate of company bonds of 3-year maturity (30.89%) and the interest rate of financial bonds and development trust (2-35%). The credit rating of Samsung bonds was BBB higher than AA, which is the basis for final return rate of 10.7 billion won, and the short-term loan interest rate of Samsung bonds of this case was 105-37% higher than that of Samsung bonds at the time of issuance of the subordinated bonds of this case, and the Plaintiff purchased the bonds of this case with a lower rate of 100 billion won and less than 170 billion won which was 9.7 billion won.

(3) The discount rate of Samsung General Chemical Bill 13.42% is 15.10% of the normal discount rate of Samsung General Chemical Paper at the same time (average discount rate for one week after its issuance) and 24.05% (as of February 13, 1998) and the credit rating such as Samsung General Chemical (as of February 13, 1998) 14.05% of the discount rate of commercial papers between 17.05% and 17.05% (as of November 14, 1997) (as of November 14, 1997) and 24.50% of the total discount rate of Samsung General Chemical Bills at the same time (as of February 13, 1998, the plaintiff purchased Samsung General Chemical Bills at the rate of 14.7 billion won and 14.7 billion won, and there seems to be no contradiction between the plaintiff and Samsung General Chemical Bills at the same rate of 14.3 billion won and its total discount rate of 194.198.4.198.

(4) The discount rate of Samsung C&T bills 18% is much lower than 35.7% of the normal discount rate for the corporate bills of Samsung C&T at the same time, and Samsung C&T had been continuously posted from 1995 to 3 consecutive years in 1997, and at the same time, sales have been reduced due to the overall economy.

【Evidence-2-1, 2, A24-1, 2, 3, 3, 4, 5-1, 2, 3, 6, 7, and 5-7

(d) Markets:

(1) As to the non-deductible of interest interest in deductible expenses

(A) Article 18-3(1)3 of the former Corporate Tax Act and Article 43-2(2)2(a) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970, Dec. 31, 198); and Article 43-2(2)2(a) of the former Enforcement Decree of the Corporate Tax Act provides that interest on loans for the procurement of provisional payments paid by a corporation to a specially related person without business relations shall not be included in deductible expenses. The purpose of the relevant Act and subordinate statutes is to improve the financial structure of the corporation and to strengthen the company's competitiveness by promoting sound economic activities by regulating the corporation with poor financial structure dependent on other capital. Thus, in light of the legislative intent of the relevant Act and subordinate statutes, the "provisional payments paid without business relations", which is the object of non-deductible in deductible expenses, includes loans with pure meaning as well as loans corresponding to loans given in light of the nature of claims, and whether provisional payments are related to the business affairs of the relevant corporation should be objectively determined based on the purpose or business contents of the relevant corporation (see, etc.

As to the instant case, it is difficult to view the Plaintiff’s purchase of the instant subordinated bonds and corporate bills to run a “other financial business” as stated in the articles of incorporation and corporate register of the Plaintiff, in light of the following: (a) the Plaintiff’s objective business; (b) the management status at the time of the purchase of the instant subordinated bonds and corporate bills; (c) the difference between the purchase interest rate and normal interest rate; (d) the type and frequency of the instant subordinated bonds; (e) the motive for the issuance of the instant subordinated bonds and the corporate management status after the acquisition of the instant subordinated bonds; (d) the financial structure and sales increase or decrease at the time of the purchase of the instant subordinated bonds and Samsung Heavy; and (e) the national financial crisis at the time of the purchase of the instant subordinated bonds and corporate bills; and (e) it is difficult to view the Plaintiff’s purchase of the instant subordinated bonds and corporate bills to run a “other financial business” as stated in the Plaintiff’s corporate register as an objective business in the Plaintiff’s incorporation and corporate register; and (e) rather, (e) the Plaintiff’s purchase at a discount rate for the Plaintiff’s special financial position to increase.

(B) The Plaintiff asserted that the purchase of the subordinated bonds of this case is a securities sale and not a loan. However, as seen above, the “provisional payment that was made without connection with the business” includes not only purely meaningful loans, but also loans in light of the nature of the claims. The subordinated privately placed bonds are one of the subordinate loans that entered into an agreement to claim reimbursement after all the general senior bonds were exercised at the time of the liquidation of the residual assets, and are in the nature of capital, which is strong. The Plaintiff’s “a management instruction of trust property and the undertaking related to the operation instruction” (5-3) entered into by the Plaintiff, provided that the maturity of the specified money trust was consistent with the redemption date of the subordinated bonds, so it is not possible to cancel the specified money trust prior to the maturity of the claims, and the Plaintiff’s purchase of the subordinated bonds of this case constitutes a loan of the funds. Accordingly, the above assertion is without merit.

(2) As to the denial of wrongful calculation

(A) "Calculation of wrongful acts" means the calculation of an act to reduce or exclude the burden of taxes incurred when a taxpayer takes the ordinary rational transaction form by taking the round-over act, the multi-stage act and other abnormal transaction form without using a normal economic person's reasonable transaction form. The purport of Article 20 of the former Corporate Tax Act Article 20 of the former Corporate Tax Act, which provides for the denial of wrongful calculation, is as follows: (a) it is recognized that a transaction with a corporation and a related party has neglected economic rationality by abusing all the forms of transactions under each subparagraph of Article 46 (2) of the Enforcement Decree of the Corporate Tax Act; and (b) it is deemed unfair from a legal point of view that the taxation authority imposed an income objectively deemed reasonable in terms of tax law, thereby ensuring fairness in taxation and preventing tax avoidance; and (c) the determination of whether the transaction is unfair in light of sound social norms or commercial practice; and (d) whether the transaction is applied at a normal rate or at a normal rate not to be applied to the transaction (see Supreme Court Decision 201Du7268, Sept. 4, 2002).

However, as seen earlier, the Plaintiff purchased subordinated bonds of Samsung 17.26% on its own at an earning rate (17.26%), but at the time of the purchase, it is considerably lower than the return rate of ordinary bonds (28-33%) at the time of the purchase, the final return rate of three-year corporate bonds (30.89%) and the interest rate of financial bonds and development trust (22-35%). The Plaintiff issued corporate bonds with the return rate of 25% prior to the seven days. The purchase discount rate of Samsung 13.42% (15.10 and 44.05%) and the discount rate of corporate bills of the same credit rating [14.05-17.05%) at the time of the purchase of Samsung 14.197, the Plaintiff’s purchase discount rate of Samsung 205% at the rate of 13.25% at the rate of 198 (205% at the rate of 4.3% at the present rate of 1998% at the rate of the company’s purchase of Samsung 1305% at the above.3% at the rate of the present rate of 199.3% (5%).

(B) With regard to the assertion that the proviso of Article 47 of the former Enforcement Decree of the Corporate Tax Act should be applied, even if the Plaintiff purchased the subordinated bonds or corporate bills of this case at a rate higher than the monthly interest rate for the current account, the difference between the amount equivalent to the interest shall be included in gross income within the scope of the loan under Article 47(2) of the former Enforcement Decree of the Corporate Tax Act, so long as the Plaintiff has a loan at a rate higher than the monthly interest rate for the current account, the difference between the amount equivalent to the interest shall be included in gross income within the scope of the loan. Thus, even in a case where the tax burden is deemed to have been unjustly reduced as in the instant case, in a case where the loan of money is deemed to have been unjustly reduced, the monthly interest rate for the current account cannot be deemed as the interest rate for the loan by applying the proviso

(C) As to the assertion that inclusion in the calculation of earnings of the 1998 business year is illegal, the corporate tax shall be determined for each business year on the basis of taxable income belonging to the one business year of the corporation as stipulated in the statutes or the articles of incorporation of the corporation. As seen above, whether the act constitutes an unfair act should be determined by each business year. Whether the act constitutes an unfair act should be determined based on the interest rate or discount rate in a normal transaction, i.e., whether the act constitutes an unfair act is unfair or unfair, but even if the money was lent at a higher interest rate or discount rate than the overdraft interest rate, the difference between the amount equivalent to the interest accrued as long as the loan has a loan higher than the overdraft interest rate. Thus,

3. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance as to this conclusion is legitimate, and it is so decided as per Disposition by the plaintiff.

Judges Kim Nung-hwan (Presiding Judge)